Germany: Industrial production rebounds in February, but manufacturing sector continues to remain limp
April 5, 2019
Germany’s industrial sector rebounded in February with output growing 0.7% month-on-month, contrasting the revised flat reading in January (previously reported: -0.8% month-on-month). Although the headline figure beat market expectations of a slightly softer expansion, underlying data paints a mixed picture. Capital goods production increased robustly but output of both intermediate goods and consumer goods fell noticeably.
Looking at sectoral data, construction activity expanded strongly in part due to milder weather. The manufacturing sector, however, continued to remain limp in February as output contracted again. This follows earlier data showing factory orders fell at the steepest pace since the crisis as external headwinds mount. “A warm thank you to the construction sector [as] German industry remains an international reason for concern. In fact, what first looked like the result of a series of negative one-off factors has all of a sudden received the flavor of an industrial meltdown”, Carsten Brzeski, chief economist at ING Germany, commented on the result. Brzeski further noted that the slowdown in the manufacturing could point to more structural flaws in the domestic market.
Compared to the same month a year earlier, industrial production was down 0.4% in February, a softer fall than January’s revised 2.7% contraction (previously reported: -3.3% year-on-year). Lastly, annual average growth in industrial production dropped to 0.2% from 0.4% in January.
Germany Industrial Production Forecast
Panelists polled by FocusEconomics expect industrial production to expand 0.6% in 2019, which is unchanged from last month’s forecast. For 2020, the panel sees industrial production increasing 1.6%.
Author: Jan Lammersen, Economist